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Choice of Business Entity Blog Series: The “D/B/A”

I am oftentimes asked about the best choice of business entity for a farm/ranch, agri-business or food entrepreneur.  There is no one-size fits all answer to that question as each type of business entity offers different strengths and weaknesses.  It is important to pick the right business entity for your specific type of enterprise – the answer to that question may change over time.  I would like to encourage all of my readers, no matter the size of your business, to have a relationship with a food and agriculture lawyer licensed in your jurisdiction and have an ongoing conversation on this topic.  This blog series will work through the major types of business entities.  You can also view my Powerpoint presentation on the choice of business entities here.  

One purple tulip among row of yellow tulipsMany sole proprietorships (and other types of business entities) operate under an “assumed name.” Many food and agriculture businesses in the state of New York that operate under an assumed name are not properly registered. Pursuant to Section 130 of the NY General Business Law (“GBL”), no person or entity can “(i) carry on or conduct or transact business in this state under any name or designation other than his or its real name, or (ii) carry on or conduct or transact business in this state as a member of a partnership” unless a Certificate of Assumed Name is properly filed.

If the person or entity is not a corporation, limited partnership or a limited liability company, then this person or entity is required to file a Certificate of Assumed Name with the county clerk of each county in which such business is conducted or transacted. In this instance, the Certificate of Assumed Name must set forth the: (i) name or designation in which business is being conducted (e.g., Rincker Cattle Co.), (ii) address within the county in which business is being transacted, and (iii) full name(s) of the people conducting or transacting business.

If the entity is a general partnership, the Certificate of Assumed Name must also contain the names and residences of all partners. The age of any person less than eighteen (18) years of age involved in the business must be included. This certificate must be signed and duly acknowledged by all persons conducting the business before a notary public.

If the entity is a corporation, limited partnership or limited liability company, then the entity is still required to file the Certificate of Assumed Name with the NYS Secretary of State that must set forth: (i) its real name, (ii) its assumed name, (iii) business structure, (iv) its principal place of business within the state of New York, (v) names of every county in which it does business or intends to carry out a business, and (vi) the street addresses for each place where it carries on or transacts businesses in the state. This Certificate of Assumed Name shall be signed by the corporation’s officer, limited partnership’s general partner, or a limited liability company’s member/manager. See GBL § 130(1)(b).

red and yellow vegetablesThere is a $100 filing fee for each county in which the corporation, limited partnership or limited liability company transacts or intends to transact business if a Certificate of Assumed Name is necessary.

The Certificate of Assumed Name does not need to be renewed; however, pursuant to Section 130(3), farms and agri-businesses are required to file an amendment within thirty (30) days if there are any change to the name and contact information of the partners. A Certificate of Discontinuance should also be filed once the business is no longer active. A certified copy of the original certificate, or if it has been amended then the amended certificate, must be conspicuously displayed on the premises at each place in which business is conducted.

Importantly, it is a misdemeanor to “knowingly make a false statement” in a Certificate of Assumed Name or make a fraudulent omission (e.g., failure to disclose the name/address of a partner). Please note that any person or entity that fails to comply with this law will be prohibited from maintaining any action or proceeding in any court in the State of New York on any contract, account or transaction made in a name other than its real name until the entity has complied with this statute. This can have dire consequences for the farm or agri-business.

It is easy to overlook details like this when starting a business from the ground up. It is even easier to push aside details once a food or agri-business has been operating for several years without properly filing a Certificate of Assumed Name. “It hasn’t caused any issues so far, so why do it?” (or “If it ain’t broke- don’t fix it.”) However, that is the wrong attitude to have. It might not have been an issue yet but it may create serious issues in the future.

This is an excerpt from my book that I co-authored with Pat Dillon, an Iowa food and agriculture lawyer.  You can purchase a copy of the book “Field Guide:  Legal Guide for New York Farmers and Food Entrepreneurs” on Amazon.com.  

Disclaimer:
"This blog is for informational purposes only and is not intended to create an attorney-client relationship. It is recommended that you speak to an attorney licensed in your jurisdiction before relying on the information in this blog."

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